- First quarter 2024 revenue of $1,622 million, up 5% on an
as-reported basis and 7% at constant currency
- First quarter 2024 diluted earnings per share of $0.78 and
non-GAAP Adjusted diluted earnings per share of $1.22; both
reported and non-GAAP Adjusted diluted earnings per share include
$15 million expense, or $(0.05) per share, for acquired in-process
research and development (IPR&D) and milestones
- First quarter 2024 net income of $201 million and Adjusted
EBITDA (non-GAAP) of $538 million
- Full year 2024 financial guidance ranges affirmed
Organon (NYSE: OGN) today announced its results for the first
quarter ended March 31, 2024.
"We entered this year with a clear focus: to deliver our 2024
financial targets while staying true to our mission of improving
the health of women, and the first quarter was a very solid start,"
said Kevin Ali, Organon's Chief Executive Officer. "We remain
confident in our ability to deliver our third year of revenue
growth on a constant currency basis and we remain committed to
delivering full-year non-GAAP Adjusted EBITDA margins that are in
line with last year, or better."
First Quarter 2024
Revenue
in $ millions
Q1 2024
Q1 2023
VPY
VPY ex-FX
Women’s Health
$
422
$
381
11%
12%
Biosimilars
170
116
46%
46%
Established Brands
1,001
1,002
—%
2%
Other (1)
29
39
(27)%
(29)%
Revenues
$
1,622
$
1,538
5%
7%
(1) Other includes manufacturing
sales to third parties.
For the first quarter of 2024, total revenue was $1,622 million,
an increase of 5% on an as-reported basis and an increase of 7%
excluding the impact of foreign currency (ex-FX), compared with the
first quarter of 2023.
Women’s Health revenue increased 11% on an as-reported basis,
and increased 12% ex-FX in the first quarter of 2024 compared with
the first quarter of 2023 primarily driven by 34% ex-FX growth in
Nexplanon® (etonogestrel implant). Nexplanon's strong performance
was primarily due to the favorable year-over-year comparison of
customer purchasing patterns associated with the timing of U.S.
list-price adjustments, coupled with favorable price and discount
rates in the U.S. and the favorable timing of tenders to markets
outside of the U.S. Worldwide sales of the Jada® system, a device
intended to provide control and treatment of abnormal postpartum
uterine bleeding or hemorrhage when conservative management is
warranted, nearly doubled compared with the prior year period,
benefiting from continued uptake in the United States following the
product's launch in early 2022. Performance in the Women's Health
franchise was partially offset by sales of NuvaRing® (estonogestrel
/ ethinyl estradiol vaginal ring), a vaginal contraceptive product,
which declined 19% ex-FX during the period due to ongoing generic
competition. The fertility portfolio was down 2% ex-FX in the first
quarter, following a very strong fourth quarter of 2023 for
Follistim AQ® (follitropin beta injection) which benefited from a
one-time buy-in associated with the planned exit of a temporary
spin-off related commercial arrangement in the U.S. and increased
demand that was largely tied to onboarding a new customer.
Biosimilars revenue grew 46% on an as-reported basis and 46%
ex-FX in the first quarter of 2024, compared with the first quarter
of 2023. This revenue growth was primarily driven by Ontruzant®
(trastuzumab-dttb), which benefited from incremental demand from a
tender in Brazil. Renflexis® (infliximab-abda) grew 12% ex-FX
primarily due to continued demand growth in the U.S and Canada
partially offset by unfavorable rates in the U.S. Worldwide revenue
of Hadlima® (adalimumab-bwwd) was $30 million during the three
months ended March 31, 2024, compared with $5 million in the prior
year period, primarily related to continued uptake following the
product's July 2023 launch in the U.S.
Established Brands revenue was flat on an as-reported basis and
grew 2% ex-FX in the first quarter of 2024. Contribution from the
recent licensing of Emgality® (galcanezumab) and RayvowTM
(lasmiditan)(1, 2), together with a recovery in certain injectable
steroid products following last year's market action offset the
impacts of Volume Based Procurement initiatives in China.
Performance was equally driven by growth in volume and price. The
company expects revenue growth in the Established Brands franchise
to be about flat for full year 2024 on an ex-FX basis.
(1) Emgality is a trademark registered in the United States in
the name of Eli Lilly and Company (used under license). (2) Rayvow
is a registered trademark of Eli Lilly in the European Union and
other countries (used under license).
First Quarter 2024
Profitability
in $ millions, except per share
amounts
Q1 2024
Q1 2023
VPY
Revenues
$
1,622
$
1,538
5%
Cost of sales
665
580
15%
Gross profit
957
958
—%
Non-GAAP Adjusted gross profit (1)
1,007
1,003
—%
Net income
201
177
14%
Non-GAAP Adjusted net income (1)
315
276
14%
Diluted Earnings per Share (EPS)
0.78
0.69
13%
Non-GAAP Adjusted diluted EPS (1)
1.22
1.08
13%
Acquired in-process research &
development (IPR&D) and milestones
15
8
—
Per share impact to diluted EPS from
acquired IPR&D and milestones
(0.05
)
(0.03
)
—
Adjusted EBITDA (Non-GAAP) (1,2)
538
518
4%
Q1 2024
Q1 2023
Gross margin
59.0
%
62.3
%
Non-GAAP Adjusted gross margin (1)
62.1
%
65.2
%
Adjusted EBITDA margin (Non-GAAP) (1,
2)
33.2
%
33.7
%
(1)
See Tables 4 and 5 for
reconciliations of GAAP to non-GAAP financial measures.
(2)
Adjusted EBITDA and Adjusted
EBITDA margin included $15 million in the first quarter of 2024 and
$8 million in the first quarter of 2023 related to Acquired
IPR&D and milestones.
Gross margin was 59.0% as-reported and 62.1% on a non-GAAP
adjusted basis in the first quarter of 2024 compared with 62.3%
as-reported and 65.2% on a non-GAAP adjusted basis in the first
quarter of 2023. The lower non-GAAP Adjusted gross margin was
primarily related to unfavorable product mix, foreign exchange
translation and higher inflation impacts to material and
distribution costs.
Net income for the first quarter of 2024 was $201 million, or
$0.78 per diluted share, compared with $177 million, or $0.69 per
diluted share, in the first quarter of 2023. Non-GAAP Adjusted net
income was $315 million, or $1.22 per diluted share, compared with
$276 million, or $1.08 per diluted share, in 2023.
Non-GAAP Adjusted EBITDA margin was 33.2% in the first quarter
of 2024 compared with 33.7% in the first quarter of 2023 primarily
due to cost containment initiatives targeting operating expenses,
particularly in research and development, that were offset by
higher cost of goods sold.
Capital Allocation
Today, Organon’s Board of Directors declared a quarterly
dividend of $0.28 for each issued and outstanding share of the
company's common stock. The dividend is payable on June 13, 2024,
to stockholders of record at the close of business on May 13,
2024.
As of March 31, 2024, cash and cash equivalents were $575
million, and debt was $8.7 billion.
Full Year Guidance
Organon does not provide GAAP financial measures on a
forward-looking basis because the company cannot predict with
reasonable certainty and without unreasonable effort, the ultimate
outcome of legal proceedings, unusual gains and losses, the
occurrence of matters creating GAAP tax impacts, and
acquisition-related expenses. These items are uncertain, depend on
various factors, and could be material to Organon’s results
computed in accordance with GAAP.
Full year 2024 financial guidance is presented below on a
non-GAAP basis, except for revenue.
Previous guidance as
of
February 15,
2024
Current guidance
Revenues
$6.2B - $6.5B
Unchanged
Adjusted gross margin
61.0% - 63.0%
Unchanged
SG&A
$1.5B - $1.7B
Unchanged
R&D*
$400M - $500M
Unchanged
Adjusted EBITDA margin (Non-GAAP)
31.0% - 33.0%
Unchanged
Interest
~$520M
Unchanged
Depreciation
~$130M
Unchanged
Effective non-GAAP tax rate
18.5% - 20.5%
Unchanged
Fully diluted weighted average shares
outstanding
~259M
Unchanged
*R&D expense includes $15 million of
IPR&D and milestone expense year-to-date March 31, 2024.
R&D guidance does not take into consideration a forward looking
view of IPR&D and milestone expense.
Webcast Information
Organon will host a conference call at 8:30 a.m. Eastern Time
today to discuss its first quarter 2024 financial results. To
listen to the event and view the presentation slides via webcast,
join from the Organon Investor Relations website at
https://www.organon.com/investor-relations/events-and-presentations/.
A replay of the webcast will be available approximately two hours
after the conclusion of the live event on the company’s website.
Institutional investors and analysts interested in participating in
the call must register in advance by clicking on this link:
https://registrations.events/direct/Q4I58511
Following registration, participants will receive a confirmation
email containing details on how to join the conference call,
including dial-in information and a unique passcode and registrant
ID. Pre-registration will allow participants to bypass an operator
and be placed directly into the call.
About Organon
Organon is a global healthcare company formed to focus on
improving the health of women throughout their lives. Organon
offers more than 60 medicines and products in women’s health in
addition to a growing biosimilars business and a large franchise of
established medicines across a range of therapeutic areas.
Organon’s existing products produce strong cash flows that support
investments in innovation and future growth opportunities in
women’s health and biosimilars. In addition, Organon is pursuing
opportunities to collaborate with biopharmaceutical innovators
looking to commercialize their products by leveraging its scale and
presence in fast growing international markets.
Organon has a global footprint with significant scale and
geographic reach, world-class commercial capabilities, and
approximately 10,000 employees with headquarters located in Jersey
City, New Jersey.
For more information, visit http://www.organon.com and connect
with us on LinkedIn, Instagram, X (formerly known as Twitter) and
Facebook.
Cautionary Note Regarding Non-GAAP
Financial Measures
This press release contains “non-GAAP financial measures,” which
are financial measures that either exclude or include amounts that
are correspondingly not excluded or included in the most directly
comparable measures calculated and presented in accordance with
U.S. generally accepted accounting principles (“GAAP”).
Specifically, the company makes use of the non-GAAP financial
measures Adjusted EBITDA, Adjusted EBITDA margin, Adjusted gross
margin, Adjusted gross profit, Adjusted net income, and Adjusted
diluted EPS, which are not recognized terms under GAAP and are
presented only as a supplement to the company’s GAAP financial
statements. This press release also provides certain measures that
exclude the impact of foreign exchange. We calculate foreign
exchange by converting our current-period local currency financial
results using the prior period average currency rates and comparing
these adjusted amounts to our current-period results. The company
believes that these non-GAAP financial measures help to enhance an
understanding of the company’s financial performance. However, the
presentation of these measures has limitations as an analytical
tool and should not be considered in isolation, or as a substitute
for the company’s results as reported under GAAP. Because not all
companies use identical calculations, the presentations of these
non-GAAP measures may not be comparable to other similarly titled
measures of other companies. Please refer to Table 4 and Table 5 of
this press release for additional information, including relevant
definitions and reconciliations of non-GAAP financial measures
contained herein to the most directly comparable GAAP measures.
In addition, the company’s full-year 2024 guidance measures
(other than revenue) are provided on a non-GAAP basis because the
company is unable to reasonably predict certain items contained in
the GAAP measures. Such items include, but are not limited to,
acquisition related expenses, restructuring and related expenses,
stock-based compensation, the ultimate outcome of legal
proceedings, unusual gains and losses, the occurrence of matters
creating GAAP tax impacts and other items not reflective of the
company's ongoing operations.
The company’s management uses the non-GAAP financial measures
described above to evaluate the company’s performance and to guide
operational and financial decision making. Further, the company’s
management believes that these non-GAAP financial measures, which
exclude certain items, help to enhance its ability to meaningfully
communicate its underlying business performance, financial
condition and results of operations.
Cautionary Note Regarding
Forward-Looking Statements
Except for historical information, this press release includes
“forward-looking statements” within the meaning of the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of
1995, including, but not limited to, statements about management’s
expectations about Organon’s future financial performance and
prospects, including full-year 2024 guidance estimates and
predictions regarding other financial information and metrics, and
franchise and product performance and strategy expectations for
future periods. Forward-looking statements may be identified by
words such as "foresees" “expects,” “intends,” “anticipates,”
“plans,” “believes,” “seeks,” “estimates,” “will” or words of
similar meaning. These statements are based upon the current
beliefs and expectations of the company’s management and are
subject to significant risks and uncertainties. If underlying
assumptions prove inaccurate or risks or uncertainties materialize,
actual results may differ materially from those set forth in the
forward-looking statements.
Risks and uncertainties include, but are not limited to, an
inability to fully execute on our product development and
commercialization plans within the United States or
internationally; an inability to adapt to the industry-wide trend
toward highly discounted channels; changes in tax laws or other tax
guidance that could adversely affect our cash tax liability,
effective tax rates, and results of operations and lead to greater
audit scrutiny; an inability to execute on our business development
strategy or realize the benefits of our planned acquisitions;
efficacy, safety, or other quality concerns with respect to
marketed products, including market actions such as recalls,
withdrawals, or declining sales; political and social pressures, or
regulatory developments, that adversely impact demand for,
availability of, or patient access to contraception or fertility
products; general economic factors, including recessionary
pressures, interest rate and currency exchange rate fluctuations;
general industry conditions and competition; the impact of
pharmaceutical industry regulation and health care legislation in
the United States and internationally; global trends toward health
care cost containment; technological advances; new products and
patents attained by competitors; the impact of higher selling and
promotional costs; any failure by Organon to obtain an additional
period of market exclusivity in the United States for Nexplanon
subsequent to the expiration of certain key patents in 2027;
challenges inherent in new product development, including obtaining
regulatory approval; the company’s ability to accurately predict
its future financial results and performance; manufacturing
difficulties or delays; financial instability of international
economies and sovereign risk; difficulties developing and
sustaining relationships with commercial counterparties; dependence
on the effectiveness of the company’s patents and other protections
for innovative products; and the exposure to litigation, including
patent litigation, and/or regulatory actions.
The company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future events or otherwise. Additional factors that could cause
results to differ materially from those described in the
forward-looking statements can be found in the company’s filings
with the Securities and Exchange Commission ("SEC"), including the
company’s most recent Annual Report on Form 10-K and subsequent SEC
filings, available at the SEC’s Internet site (www.sec.gov).
TABLE 1
Organon & Co.
Condensed Consolidated
Statement of Income
(Unaudited, $ in millions except
shares in thousands and per share amounts)
Three Months Ended
March 31,
2024
2023
Revenues
$
1,622
$
1,538
Costs, Expenses and Other
Cost of sales
665
580
Selling, general and administrative
431
435
Research and development
112
129
Acquired in-process research and
development and milestones
15
8
Restructuring costs
23
4
Interest expense
131
132
Exchange losses
6
9
Other expense, net
3
6
1,386
1,303
Income Before Income Taxes
236
235
Taxes on income
35
58
Net Income
$
201
$
177
Earnings per Share:
Basic
$
0.78
$
0.70
Diluted
$
0.78
$
0.69
Weighted Average Shares Outstanding:
Basic
255,695
254,392
Diluted
258,362
256,170
TABLE 2
Organon & Co.
Sales by top products
(Unaudited, $ in millions)
Three Months Ended March 31,
2024
2023
U.S.
Int’l
Total
U.S.
Int’l
Total
Women’s Health
Nexplanon/Implanon NXT
$
153
$
67
$
220
$
114
$
52
$
165
Follistim AQ
11
35
46
26
29
55
NuvaRing (1)
16
22
38
25
24
49
Ganirelix Acetate Injection
6
23
29
6
23
30
Marvelon/Mercilon
—
33
33
—
37
37
Jada
13
—
13
7
—
7
Other Women’s Health (1) (2)
15
28
43
9
28
38
Biosimilars
Renflexis
55
14
69
55
7
62
Ontruzant
8
31
39
13
8
21
Brenzys
—
24
24
—
19
19
Aybintio
—
8
8
—
10
10
Hadlima
22
8
30
—
5
5
Established Brands
Cardiovascular
Zetia (1)
2
82
84
2
87
89
Vytorin
1
27
28
2
28
29
Atozet
—
132
132
—
128
128
Rosuzet
—
16
16
—
18
18
Cozaar/Hyzaar
3
65
67
2
83
85
Other Cardiovascular (1) (2)
—
37
38
1
34
35
Respiratory
Singulair
2
95
98
3
117
120
Nasonex (1)
—
77
77
—
71
71
Dulera
43
13
56
38
8
46
Clarinex
1
36
37
1
39
39
Other Respiratory (1) (2)
7
3
9
12
3
15
Non-Opioid Pain, Bone and Dermatology
Arcoxia
—
75
75
—
71
71
Fosamax
1
38
40
—
37
38
Diprospan
—
29
29
—
14
14
Other Non-Opioid Pain, Bone and
Dermatology (1)
5
68
72
4
59
63
Other
Proscar
—
26
26
—
27
27
Propecia
2
21
23
2
31
33
Other (1) (4)
5
89
94
4
76
80
Other (3)
—
29
29
—
39
39
Revenues
$
371
$
1,251
$
1,622
$
326
$
1,212
$
1,538
Totals may not foot due to
rounding. Trademarks appearing above in italics are trademarks of,
or are used under license by, the Organon group of companies.
(1)
Sales of the authorized generic
versions of NuvaRing, Zetia and Nasonex were
previously included in other and have been reclassified to their
respective brand name product.
(2)
Includes sales of products not
listed separately. Revenues from Jada were previously
reported as part of Other Women's Health. Revenue from an
arrangement for the sale of generic etonogestrel/ethinyl estradiol
vaginal ring is included in Other Women's Health.
(3)
Includes manufacturing sales to
third parties for current and prior periods.
(4)
Includes revenues from the
migraine medicines Emgality and Rayvow.
TABLE 3
Organon & Co.
Sales by geographic
area
(Unaudited, $ in millions)
Three Months Ended
March 31,
2024
2023
Europe and Canada
$
450
$
400
United States
371
326
Asia Pacific and Japan
287
324
China
206
225
Latin America, Middle East, Russia, and
Africa
274
214
Other (1)
34
49
Revenues
$
1,622
$
1,538
(1) Other includes manufacturing sales to
third parties.
TABLE 4
Organon & Co.
Reconciliation of GAAP
Reported to Non-GAAP Adjusted Information
(Unaudited, $ in millions except
per share amounts)
Three Months Ended March 31,
2024
GAAP
Spin related
Costs(1)
Manufacturing
Network
Related
Costs(2)
Restructuring
Stock-based
Compensation
Amortization
Other
Non-GAAP
Adjusted
Cost of sales
$
665
(3
)
(10
)
—
(4
)
(33
)
—
$
615
Gross profit
957
3
10
—
4
33
—
1,007
Gross margin
59.0
%
62.1
%
Selling, general and administrative
431
(40
)
—
—
(18
)
—
—
373
Research and development
112
(2
)
—
—
(4
)
—
—
106
Restructuring costs
23
—
—
(23
)
—
—
—
—
Other expense (income), net
3
(4
)
—
—
—
—
—
(1
)
Taxes on income(3)
35
9
2
6
4
6
—
62
Net income
201
40
8
17
22
27
—
315
Earnings per share - Diluted
$
0.78
$
1.22
(1) Spin-related costs include costs from
the separation of Merck & Co., Inc., Rahway, NJ, US.
(2) Manufacturing network related costs
include costs from exiting manufacturing and supply agreements with
Merck & Co., Inc., Rahway NJ, US.
(3) Represents the estimated tax impacts
on the reconciling items by applying the statutory rate and
applicable law of the originating territory of the non-GAAP
adjustments.
Three Months Ended March 31,
2023
GAAP
Spin related
Costs(1)
Restructuring
Stock-based
Compensation
Amortization
Other(2)
Non-GAAP
Adjusted
Cost of sales
$
580
(10
)
—
(4
)
(29
)
(2
)
$
535
Gross profit
958
10
—
4
29
2
1,003
Gross margin
62.3
%
65.2
%
Selling, general and administrative
435
(46
)
—
(15
)
—
(1
)
373
Research and development
129
(3
)
—
(3
)
—
—
123
Restructuring costs
4
—
(4
)
—
—
—
—
Other expense (income), net
6
(6
)
—
—
—
—
—
Taxes on income(3)
58
13
1
4
6
—
82
Net income
177
52
3
18
23
3
276
Earnings per share - Diluted
$
0.69
$
1.08
(1) Spin-related costs includes costs from
the separation of Merck & Co., Inc., Rahway, NJ, US.
(2) Other costs primarily includes
one-time costs related to inventory step-up adjustments and legal
reserves.
(3) Represents the estimated tax impacts
on the reconciling items by applying the statutory rate and
applicable law of the originating territory of the non-GAAP
adjustments.
TABLE 5
Organon & Co.
Reconciliation of GAAP Net
Income to Non-GAAP Adjusted EBITDA
(Unaudited, $ in millions)
Three Months Ended
March 31,
2024
2023
Net Income
$
201
$
177
Depreciation (1)
30
28
Amortization
33
29
Interest expense
131
132
Taxes on income
35
58
EBITDA
$
430
$
424
Restructuring costs
23
4
One-time costs (2)
59
68
Stock-based compensation
26
22
Adjusted EBITDA (Non-GAAP)
$
538
$
518
Adjusted EBITDA margin
(Non-GAAP)
33.2
%
33.7
%
(1) Excludes accelerated depreciation
included in one-time costs.
(2) Represents spin-related, manufacturing
network, and other one-time costs. Spin-related costs reflect
certain costs incurred in connection with activities taken to
separate Organon from Merck & Co., Inc., Rahway, NJ, US. These
costs include, but are not limited to, $21 million and $37 million
for the three months ended March 31, 2024 and 2023, respectively,
for information technology infrastructure, primarily related to the
implementation of a stand-alone enterprise resource planning system
and redundant software licensing costs, as well as $14 million and
$6 million for the three months ended March 31, 2024 and 2023,
respectively, associated with temporary transition service
agreements with Merck & Co., Rahway, NJ, US. Manufacturing
network related costs, including exiting of temporary manufacturing
and supply agreements with Merck & Co., Rahway, NJ, US, reflect
accelerated depreciation, exit premiums, technology transfer costs,
stability and qualification batch costs, and third-party contractor
costs, and totaled $10 million for the three months ended March 31,
2024. As these costs are directly related to the separation of
Organon and therefore arise from a one-time event outside of the
ordinary course of the company’s operations, the adjustment of
these items provide meaningful, supplemental, information that the
company believes will enhance an investor's understanding of the
company's ongoing operating performance.
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